How to invest in Vanguard (from SA) when not a US citizen or resident?

[logotheran]

I tried opening a Vanguard account directly through their website, but was not able to as I am not a resident in the US (although I do have a US bank account and social security number from a previous short job there).

Has anyone succeeded in opening a Vanguard account while living in South Africa?

One of the main draws of Vanguard is the low total expense ratio. So, if a local or international brokerage firm is the only option, then I think the best option would be to have a once off fee and then only be left with the small Vanguard fee (of approx 0.08), rather than paying the brokerage firm on an ongoing basis. Has anyone done this?

 

[CptNukeEm]

A couple of friends at work invest in Vanguard ETFs using a TDAmeritrade account. Might be worth checking it out.

 

[f2wohf]

A couple of friends at work invest in Vanguard ETFs using a TDAmeritrade account. Might be worth checking it out.

Through Interactive Brokers too.

 

[FrankieK]

https://www.internaxx.com/

Formerly TD Direct International. Totally legit.
Or IB as f2wohf said.

 

[Messugga]

Easy Equities does international

 

[Muir]

Hi guys!

Hope you're well. I'm struggling with the same question as you did a while ago and was wondering whether you've found a solution. I know that one has access to Vanguard listing through SA platforms that run through the JSE, but if one truly wants to get your money offshore, versus just having offshore exposure, how do you do it?

I handle my own investment portfolio here in SA, so definitely don't need a fund manager. Just need a platform which takes my money overseas and allows me to buy Vanguard ETFs of my choosing. I know there'll be fees involved, but I want them to be access fees and not agent fees.

Any new info or advice? Many thanks!
Muir

 

[r4nd0m]

Sign up for scorepriority (formerly just2trade) or td-ameritrade.

I've got accounts with both of them and they've given me good service for the past few years.

For US based brokers, make sure they're registered with SIPC and FINRA (both the above are).

Trading fees are way lower since Schwab made a move to make zero broker fee trading happen. They're merging with td-ameritrade soon as well, so if you have a TDA account, you'll soon be on Schwab's platform.

You'd rather suffer exchange rate volatility and currency conversion fees, but have your money sitting offshore in bigger markets. The TER fees are lower and the choice of investments far higher.

Vanguard is okay, but take a look at etf.com, etfdb.com and dividend.com. There's further industries to invest in, like biotech for example.

You can really zone in on a particular industry, which you can't really do given our offerings here in ZA.

For funding, I use shyft. I try and buy when the exchange rate is low/er. When I feel I have enough, I transfer to my brokerage account at a flat fee of $14. Make sure to use the ACH method, not wire or anything else.

 

[Hamster]

Just need a platform which takes my money overseas and allows me to buy Vanguard ETFs of my choosing.

Easy Equities?



EDIT: this is their USD account, the money is truly offshore...just in case it’s not obvious

 

[hoenner69]

A friend of mine also invested in Vanguard a while ago, and even though he is only a few % up, it is dollar value, which is much better than my easy equities growth which is in Raunt value. He transferred his money via a ClickFX account into USD in his Interactive Brokers account in which he bought the Vanguard

 

[mr_norris]

A friend of mine also invested in Vanguard a while ago, and even though he is only a few % up, it is dollar value, which is much better than my easy equities growth which is in Raunt value. He transferred his money via a ClickFX account into USD in his Interactive Brokers account in which he bought the Vanguard

As others have pointed out in this thread, EE has a US account which is in dollars. Yes, there are options to invest zar in your zar account too. The growth in the US account would be the same, as you are investing in the same thing whether it's clickfx or EE. the only difference would be platform / transaction costs

 

[Crankshaft]

Might also be worthwhile to find out how much you are covered for in case of broker bankruptcy. I have taken that aspect more seriously since my portfolio has grown into a sizable amount. I love my current platform, but they only cover up to EUR 20 000. TD Ameritrade covers up to USD 500 000, so I am thinking about switching. I am not in SA so I don't know about EE? Does anyone know how much they cover?

 

[netcruiser]

Why not just invest in local ETFs that invest overseas, e.g. SATRIX ETFs (S&P 500, Nasdaq, Emerging Markets, China) which gives you pretty much the same exposure as the Vanguard ETFs.

 

[r4nd0m]

Might also be worthwhile to find out how much you are covered for in case of broker bankruptcy.

SIPC - What SIPC Protects

Securities Investor Protection Corporation

www.sipc.org

Good idea to diversify among different SIPC brokerages.

 

[r4nd0m]

Why not just invest in local ETFs that invest overseas, e.g. SATRIX ETFs (S&P 500, Nasdaq, Emerging Markets, China) which gives you pretty much the same exposure as the Vanguard ETFs.

PRO
- Keep investment in foreign currency (e.g, USD)
- Keep investment offshore since our country is volatile (view dependent)
- Lower expense ratio on many ETF's
- Bigger choice of ETF's on offshore brokerages

CON
- Exchange rate volatility
- Currency conversion and payment (transfer) fees
- Investments are not local and require more tax administration for CGT/dividends (view dependent)
- No tax breaks like with TFSA/RA/etc...

 

[surface]

What is the minimum investment (Rands) for any/all these off-shore options that makes it a bit viable in terms of fees? 200K ? 500K ? Don't we need a overseas bank account for this?

 

[JayM]

What is the minimum investment (Rands) for any/all these off-shore options that makes it a bit viable in terms of fees? 200K ? 500K ? Don't we need a overseas bank account for this?

I'd say anything over R100K makes it worthwhile to open an offshore brokerage account. You don't need an overseas bank account - you can fund your brokerage account directly with a SWIFT transfer using your bank or forex specialist. I normally use E4F if I'm over my single discretionary allowance for the year as they handle tax clearance and waive the SWIFT fees if the transfer is over R100K. Otherwise I just use FNB as their rates are not bad and you get half the fees back in ebucks anyway.

 

[r4nd0m]

You should try Shyft if the broker accepts ACH (US transfer network) deposit. $14 fixed fee and I found the forex rates much more competitive than FNB's.

 

[cguy]

Might also be worthwhile to find out how much you are covered for in case of broker bankruptcy. I have taken that aspect more seriously since my portfolio has grown into a sizable amount. I love my current platform, but they only cover up to EUR 20 000. TD Ameritrade covers up to USD 500 000, so I am thinking about switching. I am not in SA so I don't know about EE? Does anyone know how much they cover?

Is this FDIC coverage that you are talking about for Ameritrade or something private being offered? If the former, as an FYI it’s only $500k if you have your spouses name on the account too, otherwise it’s $250k.

 

[JayM]

Is this FDIC coverage that you are talking about for Ameritrade or something private being offered? If the former, as an FYI it’s only $500k if you have your spouses name on the account too, otherwise it’s $250k.

Bank accounts are covered by FDIC, brokerage accounts by SIPC. SIPC coverage is $500K, with a $250K cash sublimit.

 

[surface]

I'd say anything over R100K makes it worthwhile to open an offshore brokerage account. You don't need an overseas bank account - you can fund your brokerage account directly with a SWIFT transfer using your bank or forex specialist. I normally use E4F if I'm over my single discretionary allowance for the year as they handle tax clearance and waive the SWIFT fees if the transfer is over R100K. Otherwise I just use FNB as their rates are not bad and you get half the fees back in ebucks anyway.

Thanks, I am checking ameritrade site and individual brokerage account option. I suppose one can ask for redemption in local/foreign bank account, whatever is applicable.